HEALTHY SEAFOOD FOR FUTURE GENERATIONS

Transcription

1 HEALTHY SEAFOOD FOR FUTURE GENERATIONS Enabling the supply of healthy and delicious fish, forever. SUSTAINABILITY REPORT 2015

2 D Section 01 EWOS IN BRIEF EWOS is a trusted supplier of feed and nutrition for the international aquaculture industry. For more than eight decades, we have been developing solutions and creating value for our customers, and continuously improving business efficiency and sustainability. Cargill Aqua Nutrition (CQN) was formed in October 2015, following the acquisition of EWOS by Cargill. CQN brings together legacy EWOS and legacy Cargill aqua businesses into a focused group that aims to become the global leader in aquafeed and nutrition. As this report is retrospective, EWOS is still being referred to as the company in the report. About this report The EWOS Sustainability Report 2015 constitutes our sustainability performance for the fiscal year As EWOS is now part of Cargill, a privately held company, financial performance will not be part of the report. See for more information. See for EWOS previous sustainability reports. Questions regarding the report or its contents Karl Tore Mæland, Director Sustainability & QM, EWOS Karl_tore_meland@cargill.com Editorial and design team EWOS: Louise Buttle, Hanne Dankertsen, Karl Tore Mæland Project advisors: Christoffer P. Knudsen, Styrkr and Itera Gazette Design, project management and production: Itera Gazette For in-depth discussions on topical issues relating to fish feed, please refer to our occasional, international publicaton EWOS Spotlight. Issues are available at our web site:

3 CONTENTS SECTION 1 ABOUT EWOS Read about how we create and share value to provide healthy seafood for future generations. EWOS in brief / page 2 CEO message / page 4 How we create value / page 6 Key trends impacting our business / page 8 Sustainability highlights 2015 / page 10 Our products / page 12 SECTION 2 FOUR PILLARS Learn about what we do and what sets us apart. Innovating fish feed / page 14 Reducing our footprint / page 28 Supporting fish health / page 40 Respecting people / page 50 SECTION 3 MANAGING SUSTAINABILITY Understand our approach to reporting and managing sustainability issues. Sustainability governance / page 64 Materiality process and conclusions / page 66 Listening to our stakeholders / page 68 SECTION 4 REPORT PROFILE Learn about our application of the Global Reporting Initiative reporting framework. Report scope / page 72 GRI index / page 73 List of abbreviations / page 77

4 2 Section 01 EWOS IN BRIEF 80 YEARS OF EWOS 1931 EWOS is established as a general partnership ( handelsbolag ) in Sweden EWOS AB is acquired by the pharmaceutical group AB Astra Norsk Landbrukskjemi AS, sister company of EWOS in Södertälje, is established in Norway Agreement concluded between EWOS and Felleskjøpet. The fish feed is marketed under the brand FK-EWOS. EWOS in brief Healthy seafood for future generations 1979 Alfa Laval AB buys EWOS from Astra AB Norsk Landbrukskjemi AS changes name to EWOS AS. Cultor buys EWOS from Alfa Laval EWOS and FK part company and EWOS establishes itself on its own in Norway FK Aqua (FKT) and Stormøllen Havbruk (Statkorn Holding) create a new fish feed company: NorAqua NorAqua and fish feed development company FKF merge The Danish company Danisco AS buys Cultor OY from Finland Statkorn Holding (later Cermaq) buys EWOS from Danisco, and EWOS and NorAqua are merged CERMAQ sells EWOS to the investment funds Altor and Bain Capital US-based company Cargill acquires EWOS for 1.35 billion euros. EWOS, now owned by Cargill, is one of the world s largest suppliers of salmon feed and nutrition for the aquaculture industry. We have produced fish feed since 1935 and operate in all four of the world s major salmon farming regions: Norway, Chile, Canada, and Scotland. Our operations in Vietnam produce feed for warm water species. Aquaculture feed, in the form of extruded pellets, is marketed under the EWOS brand for both coldwater and warmwater fish species. In coldwater, this mainly includes Atlantic salmon, coho salmon and rainbow trout. Approximately 93 per cent of the feed volume we produce consists of salmonid feed, with the rest of the feed targeting other warm water fish species; EWOS Vietnam produces feed for snakehead, tilapia and pangasius. We maintain a strong reputation as the leader in our field, based on the service we provide as well as the quality of our feed. With state-of-the-art research centres in Norway and Chile, we invest continuously in developing efficient and sustainable feed solutions, supporting fish health, and improving production processes. Cargill Aqua Nutrition is headquartered in Bergen, Norway; Cargill in Minneapolis, Minnesota, USA.

5 OUR OPERATIONS EWOS INNOVATION RESEARCH STATIONS Dirdal (Norway), Colaco (Chile), Vinh Long and Can Tho (Vietnam) HEAD OFFICE Dirdal, Norway BRANCH OFFICE Sandnes EMPLOYEES 66 (Norway), 23 (Chile), 3 (Vietnam) CHILE CANADA NORWAY SCOTLAND VIETNAM OPERATIONS Coronel Conception, Colaco (IE), Puerto Montt HEAD OFFICE Puerto Montt EMPLOYEES 368 FACTORY Coronel Conception OPERATIONS Surrey, New Brunswick HEAD OFFICE Surrey EMPLOYEES 81 FACTORY Surrey DISTRIBUTION New Brunswick warehouse OPERATIONS Finnsnes, Halsa, Trondheim, Florø, Bergen HEAD OFFICE Bergen EMPLOYEES / APPRENTICES 261 / 22 FACTORIES Florø, Halsa and Bergneset OPERATIONS Westfield HEAD OFFICE Westfield, West Lothian EMPLOYEES 71 FACTORY Westfield OPERATIONS Long An, Can Tho (EI), Ho Chi Minh City, Vinh Long (EI) HEAD OFFICE Long An EMPLOYEES 176 FACTORY Long An KEY FIGURES 2015 for our EWOS brand 1,049 EMPLOYEES 1.13 MILLION TONNES OF FEED SOLD 1 in 3 MARKET SHARE EWOS feeds 1 of every 3 farmed salmon in the world 9.5 USD million ANNUAL INVESTMENT IN R&D* * Norway and Chile. Excluding any investment and running costs for the Cargill Aqua Innovation Center.

6 4 Section 01 CEO MESSAGE HEALTHY SEAFOOD for future generations Consumers want to know where their food comes from, what it is made of and how it is produced. Listening to consumers and providing them with transparent information, so they know their food is produced safely and sustainably, will become increasingly important both in the future and across the globe. Whether we are developing new technologies, sourcing new raw materials or innovating new feeds, the need for transparency in everything we do is fundamental. Consumers want to have confidence in the choices we make as a business. This transparency needs to cover the entire value chain. WHAT SUSTAINABILITY MEANS As a producer of feed for aquaculture, we often meet the misconception that sustainability equates to footprints. However, sustainability is far more than that. It is about meeting the needs and aspirations of the present, without compromising the ability of future generations to meet their own needs. Sustainability has three dimensions economic, environmental and social. These three dimensions are mutually dependent and need to be balanced. It is our responsibility to operate sustainably, and also to continuously strive to reduce our footprint. The details on how we do that are described in this report. GROWING NEED FOR PROTEIN The global need for food is growing, and the need for protein is expected to increase by 70 per cent worldwide by We believe that farmed seafood offers one crucial solution to meeting this demand. Fish is the most resource-efficient animal protein available to humans, aside from insects. We are committed to feeding the world s seafood in a responsible way; reducing our environmental impact; and improving the communities where we live and work. SAFETY FIRST Safety, both in terms of food safety and safety for people, is fundamental for Cargill. Safety in the working environment means that everyone returns safely to their loved ones. In Cargill, we live by the expression people over profit. Key safety metrics are included in this report.

7 In the report, you will read not only about our efforts to create a more sustainable supply chain, but our actions to increase food security more on that in the section about new ingredients. They are part of the same equation and we are honoured to have a role in addressing how to feed the world and at the same time, protect the planet. In short, our commitment is to provide healthy seafood for future generations. Sincerely, Einar Wathne It is our responsibility to operate sustainably, and also to continuously strive to reduce our footprint. The details on how we do this, are described in this report. Einar Wathne

8 6 Section 01 VALUE CHAIN We are fortunate to have EWOS advanced leadership in sustainability practices inside the house of Cargill now JOE STONE Cargill corporate vice president IN THE VALUE CHAIN FOR HEALTHY FISH EWOS core business is the production of fish feed. Our important role in the value chain for healthy and nutritious fish, means we must pay great attention to the impact we make both upstream and downstream. This includes using only ingredients that we judge to be responsibly produced, and working closely with our customers to improve their productivity and support the welfare of the fish. From raw materials to the plate, we follow EWOS integrated management systems to help ensure nutritious and safe food. The "creating value" figure opposite describes our supply chain.

9 CREATING VALUE INNOVATION We bring innovative solutions to the feed industry and food value chain. 1. We put great emphasis on responsible sourcing and efficient use of marine resources. 3. We carefully manage the impacts of our feed production, close to major fish farming markets. 2. We have increasingly replaced marine raw materials with responsibly produced plant proteins and oils. 4. Our feeds provide the right nutrition and support the health and welfare of farmed fish. 5. We are proud to enable efficient farming of delicious and healthy food.

10 8 Section 01 KEY TRENDS KEY TRENDS impacting our business Resource depletion Demand for marine resources is high, putting pressure on a finite supply of fish oil and driving our innovation to include other protein sources. Agriculture is a large supplier of alternative raw materials, but the sector is challenged by water scarcity, soil depletion and a looming shortage of phosphate. What it means to us We need to continue efforts to expand our ingredients portfolio and to use only raw materials that are sustainable and responsibly produced. 35% Globally FAO reports that more than one-third of the raw materials used for fishmeal are by-products and trimmings. These are resources that would have otherwise be discarded. (SOURCE: FAO SOFIA) Climate change Agriculture is vulnerable to climate change. Driven in part by deforestation, global warming also limits farm expansion on new land. In the Pacific, the 2016 El Nino has hit the salmon farming industry with a deadly algae bloom and is forecast to deeply affect catches of anchovy for fish meal and fish oil. What it means to us While farmed salmon has a favourable carbon footprint compared to land-based animals, we need to continue efforts to reduce it and add flexibility to our raw material use. 1:10 The carbon footprint of farmed Atlantic salmon is about one tenth that of beef. (SOURCE: TORRISSEN ET AL (2011): ATLANTIC SALMON (SALMO SALAR): THE SUPER-CHICKEN OF THE SEA? )

11 Fish health challenges Diseases and sea lice currently present the biggest challenge to productivity in the salmon farming industry, driving mortality and significant economic loss. Medicinal responses are both costly and increasingly controversial. What it means to us We need to support the industry by developing functional feeds that can be used as part of an integrated pest management for sea lice and support fish health in challenging situations. 400 USD MILLION A conservative estimate for costs inflicted by sea lice on Norwegian salmon farmers in (SOURCE: KONTALI ANALYSE) Consumer concern Consumers worldwide increasingly care about the sustainability and nutritional value of the food they eat. The international interchange of materials and products is countered by a pull for more transparency and responsible corporate behaviour. What it means to us Traceability of raw materials and transparency in reporting will only grow in importance. Our opportunity is to help educate consumers about the favourable carbon footprint of farmed fish. Transparency in reporting up to date information on the industry will also help to support the public image. 80% Aquaculture accounts for roughly 80 per cent of global fish oil use, of which 70 per cent is used in salmonid feed. The fish oil is a valuable source of omega-3 fatty acids beneficial to human health. Demand for protein Along with population growth, increasing affluence in many regions is driving a change to more protein-rich diets. Consumers are also more health conscious and the market for dietary supplements has driven demand for omega-3. What it means to us Salmon farming is a highly efficient way of producing protein and the essential omega-3 fatty acids (EPA + DHA), meaning we play a critical role in feeding a growing and hungry planet. +98% By 2030, the consumption of fish from aquaculture is forecast to reach 93.6 million tonnes, close to doubling the amount consumed in (SOURCE: THE WORLD BANK, FISH TO 2030)

12 Do 10 Section 01 EIMS / HIGHLIGHTS 2015 EIMS: (EWOS Integrated Management System) Plan EIMS Mission Vision Values Policies HACCP ISO FOOD SAFETY GRI G4 UNGC ASC ProTerra & RTRS IFFO RS New York Declaration Act ISO 9001 QUALITY MANAGEMENT ISO ENVIRONMENTAL MANAGEMENT ISO OCCUPATIONAL HEALTH & SAFETY Global G.A.P, ASC and BAP Check READ MORE: For details on accreditations, see p. 64 We have a strong track record with regard to sustainability, quality, food safety and occupational health & safety. Our commitment to continuous improvement is evidenced in the EWOS Integrated Management System (EIMS), which has become pivotal to the way we do business. It represents a systematic way of managing social and environmental risk in our business, in compliance with recognised international standards and our corporate commitments and endorsements. All EWOS salmon feed plants are independently certified to four international management standards for quality (ISO 9001); food safety (ISO 22000); environment (ISO 14001); and health & safety (OHSAS 18001) management. In addition, individual plants can be accredited to different standards, like GlobalGAP, for example, to meet local market needs.

13 HIGHLIGHTS 2015 from our sustainability efforts Functional feeds and EWOS EWOS sales of functional feed supporting fish health in 2015 was 22.5 per cent of total sales. Functional feeds are here to stay and the USD 10.5 million investment in the Cargill Aqua Innovation Center in Chile is testament to the importance of functional feeds in our product portfolio today and going forward. > More on page 42 Heads or tails? We go for both In 2015, 30 per cent of the marine ingredients EWOS purchased for use in salmon feeds were from fish trimmings. That is an increase of almost 10 per cent in five years. This raw material has become available as a result of supplier development programmes and screening from EWOS Innovation. > More on page 16 Reducing our marine dependence Over the last 10 years EWOS has reduced the marine index dramatically from 55% in 2005 to 27% in In 2015, EWOS group was for the first time able to provide feed that give customers the opportunity to be net producers of marine protein. > More on page 24 Licence and certification, please! Soy protein concentrate represented 15 per cent of EWOS raw materials in That same year, we made a commitment to source soy products from Brazil certified to ProTerra or RTRS (or equivalent). We expect certified soy to reach 100 per cent for EWOS Norway and Scotland in Where certificates are not available, there are supplier development programmes in place. > More on page 19 Cooler production EWOS has successfully reduced its greenhouse gas emissions per tonne feed produced by more than 11 per cent since This has been achieved through a number of investments in renewable energy and more efficient technologies. > More on page 36

14 12 Section 01 PRODUCTS OUR PRODUCTS The portfolio described in two dimensions LIFECYCLE JUVENILE Feed given to juvenile salmonids in freshwater, from start feeding up to the point of transfer to sea water TRANSFER Feed given during the critical transfer phase, when the fish are moved from freshwater to seawater GROWER Feed given in the seawater production phase, post transfer and until harvest STANDARD Conventional feed products delivering balanced nutrition START MICRO TRANSFER SOLID OMEGA DYNAMIC CATEGORIES PERFORMANCE Feed supplemented to optimise the weight gain of fish during the seawater production phase RAS ADAPT BOOST EXTRA OMEGA HP RAPID HEALTH Feed supplemented or nutritionally adapted to support fish against health and stress related challenges or during disease outbreak and recovery BOOST ADAPT BOOST BOOST ROBUST ALPHA

15 PREFERRED BY ONE BILLION SALMON GEOGRAPHY OPTIMISED FEED SEASON COMPASS SALMON PRICE RAW MATERIAL PRICE SMOLT TYPE Our latest feed concept EWOS COMPASS is based on our own research and performance data as well as data from our customers production compiled from more than 1 billion salmon. Based on this wealth of data, EWOS COMPASS gives us the necessary tools to develop and adapt feed for any production scenario, anywhere in the world, based on the local environment and conditions, the market value of salmon, and the cost of feed materials. It is the epitome of sustainability, providing value to our customers, improving resource efficiency and reducing environmental impacts. > See compass.ewos.com

16 14 Section 02 INNOVATING FISH FEED

17 INNOVATING FISH FEED THE CHALLENGE Demand for marine ingredients challenges traditional supply chains OUR RESPONSE Sourcing of marine ingredients responsibly and finding sustainable alternatives while protecting fish health and performance, and upholding consumer satisfaction

18 16 Section 02 INNOVATING FISH FEED EXPANDING our raw materials basket DOMINIC NANTON Researcher As global salmon production increases a trend set to continue going forwards ideas for future ingredients in salmon feed are plentiful. Supplies of fish oils are finite, and alternatives to fish protein are also needed to further reduce dependency on marine resources. A number of ingredients from agriculture and the food processing industry have already made their way into the feed, and other alternatives, such as algae, insects and outputs from novel ocean farms, are being evaluated. MAY HELEN HOLME Researcher PROPORTION OF TRIMMINGS* USED IN SALMON FEED IN % * TOTAL MARINE USE Not one for speculating, senior scientist Dominic Nanton with EWOS Innovation, says that fish oil will remain an essential ingredient for salmon feed, at least in the near future. We track, develop and evaluate alternative products and byproducts in salmon feed for replacing fish oil as the major source of EPA and DHA, the two valued omega-3 fatty acids. Algae and genetically modified plant oils are two candidates with future potential. Algae volumes have been too small and too expensive but there is movement in the right direction with fermented algae in particular. Genetically modified plant oil can initially be a solution in the Americas where there is general acceptance for using such products. In the EU it will require a relatively long and expensive registration process and consumer acceptance before commercial use in salmon feed, says Nanton. REPLACE OR RETAIN Working with different ways of dealing with fish oil shortages, Nanton explains that using alternative sources of EPA and DHA is just one strategy. Another important strategy under development is to increase retention of these fatty acids in the salmon fillet. This strategy is essentially about making the most of the available omega-3 during the production cycle," he continues. It has also become increasingly important to determine the minimum fish oil (EPA+DHA) level needed by the salmon during a shortage situation. About one per cent EPA+DHA of diet from fish oil is enough for optimal growth of salmon in sea water based on EWOS and other research, but the level needed for optimal health and robustness is less well defined.

19 THE PERFECT RAW MATERIAL IS OUT THERE! 90m. tonnes total capture 20 m. tonnes industry/ meal/oil 35 m. tonnes fish trimmings and by-products 35 m. tonnes human consumption 55m. tonnes raw materials Globally there is roughly 90 million tonnes of fish harvested from the sea. Of this 90 million tonnes, there is 70 million tonnes of fish caught for human consumption. Only 50 per cent of this 70 million tonnes is yield for human consumption - therefore 35 million tonnes of the fish trimmings are available as raw material for fish meal and fish oil production for aquaculture. Along with 20 million tonnes of raw material from reduction fisheries; this gives a potential availability of 55 million tonnes of raw materials available for fish meal and fish oil production in the aquaculture industry. Source: IFFO, FAO ONE MAN S TRASH... According to the Norwegian research organisation SINTEF as much as tonnes of marine raw materials were wasted in 2013 in Norway alone. And globally, huge quantities of bycatch from other fisheries never reach the shore, but are dumped at sea in line with international agreements.... ANOTHER MAN S TREASURE Trimmings and by-products from fish are an ideal raw material for fish feed: It is the natural food for fish, it can often be sourced locally and it upcycles materials that would otherwise go to waste into healthy and delicious food. PERFECT PARTNERS EWOS works to increase the proportion of upcycled protein and oil in our feed. Since 2012, we have successfully partnered with Hordafôr, a Norwegian company specialising in this field to produce fish protein concentrate (FPC) and fish oil from trimmings and by-products for use in our feed. Hordafôr s method for ensiling and preserving trimmings has great potential to increase recovery of marine ingredients that would otherwise go to waste from fishing vessels and processing facilities. Given the right incentives, it could reduce our dependency on raw materials produced from forage fish even further.

20 18 Section 02 INNOVATING FISH FEED What will salmonid feed be made of in the future? Marine 69% Other 19% Marine 31% Other 16% Marine 10% Novel 10% Other 11% The 90 s Plant 12% Today Future? Plant 53% Plant 69% This figure shows how the use of raw materials has changed in the past - and how it may look in the future. EPA and DHA above the one per cent of diet is mainly included to cater to customer requirements for fillets high in omega-3. EWOS is involved in a number of innovative projects to explore new sources of omega-3. One such is the innovation network CO2BIO, which aims to use CO 2 captured from the oil refinery Mongstad outside Bergen, Norway to produce omega-3 from algae. CO2BIO started construction on a pilot plant at the location in April This pilot project fits in well with EWOS sustainability goals and has a longer term perspective evaluating the potential for industrial production of algae as a cost effective source of EPA and DHA to replace fish oil in salmon feed, comments Nanton. EWOS also collaborates with Ocean Forest, a company owned by Lerøy Seafood Group and the Norwegian NGO Bellona. Ocean Forest is working on an integrated aquaculture system in which it hopes to produce algae, seaweed, mussels and different fish species while capturing CO 2. EWOS Innovation will in 2016 finalise an investigation of the use of mussel meal in salmon feed. PROTEIN PLETHORA While alternatives to fish oil are currently few and far between, new protein sources come by the dozen. At least before screening, says May Helen Holme, but few pass our tests. A research scientist, Holme is part of EWOS Innovation s extensive programme to add new protein sources to its basket of raw materials. With this programme EWOS aims to be at the forefront in discovering new protein raw materials and to foresee opportunities emerging from new processes and industries. We screen more materials now than ever before, about 100 each year. Some are sent to us from suppliers worldwide. Others come from our own searches in different industries or from academic literature searches, says Holme, adding that EWOS is looking for raw materials with a high level of protein and characteristics that will support fish health and growth and not affect feed quality. Commercial considerations like price and availability are of course important parameters, too. FIT FOR FEED We apply different steps in the assessment process to evaluate new materials. One is a chemical assessment, in which we look at the chemical properties and compare it to our extensive library of materials. Also, we evaluate the biological properties and digestibility for the salmon. As part of this process we will also set up trials for promising materials, says Holme, moving on to explain another process, which is to investigate the technical properties. It has become increasingly important that the raw material works well in the meal mix. Otherwise, we risk possible negative effects on feed quality which can cause losses either in our own production processes, during shipping or in the customers feeding systems. In addition EWOS will assess risk related to food safety and sustainability. Based on a well- established system for supplier approval, EWOS applies increasingly stringent standards to raw materials (see opposite page). Food safety and sustainability form the very foundation for our work to find new raw materials and are non-negotiable, Holme points out. Finding protein sources to complement fishmeal is key to securing future growth for salmon farming. According to Holme, one of the most important developments in the quest for new ingredients is the focus on an increased protein level of several alternatives. And while the search for alternatives is still on, the testing and inclusion of fishmeal has become highly sophisticated. We have developed a very

21 SOURCING RESPONSIBLY EWOS maintains a sharp focus on the supply chain, striving to source raw materials that are responsibly produced. EWOS system for supply chain risk analysis and supplier approval regulates how we select, approve, audit and control raw material suppliers. We expect all our suppliers to uphold our Code of Conduct for Suppliers and that they request similar standards for their suppliers and subcontractors. Both the code and our sourcing policy are available online at We will only use ingredients that we judge to be responsibly produced based upon the best avail able information. All raw material suppliers must be approved before we order their products; a process that involves reviewing risk related to food safety, commercial aspects and product quality as well as sustainability issues. > For more on sourcing and supplier audits in 2015, see pp MARINE SOURCES TERRESTRIAL INGREDIENTS EWOS only sources marine raw materials that come from fisheries adhering to FAO s Code of Conduct for Responsible Fisheries, which excludes illegal unreported and unregulated fishing (IUU). We prioritise marine ingredients that are certified to the IFFO RS. Furthermore, we are working to enable our customers to comply with the evolving ASC Responsible Feed Standard, which will include sourcing MSC approved marine ingredients. Our suppliers comply to regulations for bycatch. IFFO RS Certification programme for responsible supply of fishmeal and fish oil, from IFFO The Marine Ingredients Organisation. Marine Stewardship Council Fisheries Standard Certification programme to assess if a fishery is well managed and sustainable, from the MSC. FishSource Online resource for sharing information on the status of fish stocks and fisheries, created by the NGO Sustainable Fisheries Partnership. EWOS is committed to using deforestation free raw materials and to the New York Declaration on Forests. We will source soy products from Brazil, our main supplier, that are certified to ProTerra, RTRS or equivalent. Use of soy products from other countries can be approved given evidence that they are responsibly sourced or that the suppliers have development programmes in place to achieve credible third-party certification. ProTerra Standard Certification scheme to ensure sustainable and fully traceable agricultural commodities, including non-gmo soy, from the ProTerra Foundation. RTRS Standard for Responsible Soy Production Certification programme to promote responsible production, processing and trading of soy, from the Round Table for Responsible Soy (RTRS) New York Declaration on Forests Cargill has endorsed the timeline to cut natural forest loss in half by 2020, and strive to end it by 2030.

22 20 Section 02 INNOVATING FISH FEED efficient method for analysing fishmeal. It enables us to buy better products and to direct different qualities to different feed types. Furthermore, it means we can optimise our production processes to suit each batch of fishmeal, which is important to our efficiency, explains Holme. TURNING GREENHOUSE GAS TO FEED Too good to be true? It is becoming reality, according to the California-based company Calysta. The technology in question is based on a bacterium that can be placed in fermentation tanks, fed methane and turned into an alternative protein product. Together with five other investors, Cargill in February 2016 announced a USD 30 million investment to further develop Calysta and its protein product. ROYAL FEED EWOS Scotland makes bespoke feed for the Scottish fish farmer Loch Duart based exclusively on fish meal from Icelandic capelin, which are IFFO RS responsibly sourced. While the roe of the capelin is extracted and marketed to discerning consumers, primarily in Japan, the rest of the fish is used to produce a high quality fish meal called Royal, ideal for salmon feed. The end result is Loch Duart s own label feed, which meets Loch Duart and EWOS common objectives of making feed that is as close to the salmon s natural diets as possible and made from sustainable ingredients. TIME TO RETHINK The quest for sustainability in feed production also presents challenges to the consumers of farmed salmon. Oil expert Dominic Nanton would encourage consumers to rethink their omega-3 requirements. Currently, we are tailoring levels of EPA and DHA to customers requirements. In terms of sustainability, it can be better to lower the EPA+DHA content in the salmon while still delivering the EPA+DHA dose needed to meet human health recommendations. The recommended EPA+DHA dose in the fillet is dependent on serving size, number of servings per week and which health authority recommendation is used. However, the decision rests with our customers and of course the consumers, he says. Similarly, a number of available raw materials are textbook examples of sustainable sourcing, yet hard to accept for consumers. Animal by-products made from parts that do not go to human consumption, such as poultry meal and feather meal, is just one example. They are accepted by consumers as feed ingredients in many regions, unacceptable in others. What about insects? Can insect meal gain consumer acceptance? Participating in the ambitious research project Aquafly with the National Institute of Nutrition and Seafood Research (NIFES), May Helen Holme certainly hopes it can. It is an important project. Aquafly will investigate if insects can be safe and healthy ingredients in future feeds. Insect meal and fat have not yet been approved for use in feed in the EU due to lack of documentation, but we hope that the regulations will soon change in our favour, she says, noting that EWOS at no point will use feed ingredients that make the salmon anything less than a highly nutritious, tasty and delicious meal. Salmon farming is a great way of turning lower-grade protein into healthy food, rich in omega-3. If consumers are willing to accept new but tested and approved ingredients in the feed, we can take the sustainability of the industry to a new level. And after all, no one would hesitate to eat a wild trout, and what is their primary food? Insects!

23 SALMON TWICE A WEEK Two servings of salmon a week is enough! The European Food Safety Authority (EFSA) recommends 1.75 g EPA + DHA per week for human health. Even if there is a lower content of omega 3 in the salmon feed these recommendations are still met by two servings of salmon a week. HIGHER CONTENT OMEGA-3 LOWER CONTENT OMEGA-3 7.5% EPA + DHA of fat in feed 5% EPA + DHA of fat in feed 1.3% EPA + DHA of fillet 1.0% EPA + DHA of fillet 3.3g EPA + DHA in 2 servings of 125g fillet per week 2.4g EPA + DHA in 2 servings of 125g fillet per week 1.75g EPA + DHA= EFSA weekly requirements

24 22 Section 02 INNOVATING FISH FEED INNOVATING FISH FEED: OUR PERFORMANCE WHY IS IT MATERIAL? Intensive aquaculture is a very new science, compared to livestock and poultry production, for example. Different farmed species have different nutritional requirements, but one of the principles of animal welfare for farmed animals is freedom to access to nutritious feed. Innovation in fish feed has helped to define the nutritional requirements of the fish species and how to supply them efficiently and responsibly. For many years the salmon feed industry was strongly challenged by engos over its use of forage fish for fishmeal and fish oil. It was not seen as an efficient use of a finite marine resource to use a high proportion of fish to feed other fish. Fish in fish out (FIFO) ratios were out of date, misinterpreted and highly publicised. As consumers show more interest in their food value chains and are moving one step back along the supply chain, they increasingly want more information on where their food comes from and what it has been fed. Traceability of raw materials and sustainability issues pertaining to them are increasingly important to the aquaculture industry, as well as the need to communicate timely, accurately and transparently. EWOS is committed to contribute to sustainable aquaculture by supplying high quality feeds, so providing essential protein and fatty acids for a growing world population. Seafood is an important part of a healthy diet, providing not just protein, but the long chain omega-3 fatty acids essential to human health. Choosing the right raw materials for our feeds and using them to create efficient, healthy feeds for aquaculture is one of our most important contri butions to producing more seafood in a sustainable manner. WHAT EWOS DOES Aquaculture feeds are made from a mixture of fish and plant based raw materials, providing proteins, oils, vitamins and minerals in a balance which should support this. More than 20 years ago the feeds for salmon relied heavily on fish based materials to provide highly digestible protein and essential fatty acids. However, even then EWOS Innovation saw the requirement to reduce the dependency on marine raw materials and has led initiatives which continue today. In response to the FIFO ratios, EWOS developed the marine dependency ratios for oil and protein. In addition we refer to the forage fish dependency ratios which are routinely presented for customers as part of the ASC standard.

25 Marine raw materials are still used in feeds, but at a much lower inclusion than before. Responsible sourcing of these materials is key and various requirements have been set for suppliers the first and most obvious being following the FAO Code of Conduct for Responsible Fisheries and avoiding IUU fish. While EWOS does not monitor data on wildlife interactions, we promote responsible fishing standards which maintain biodiversity by adhering to this standard. We also work closely with a number of organisations supporting responsible fisheries, also supporting initiatives on fisheries improvement programmes and certifications, such as the Sustainable Fisheries Partnership, IFFO RS and MSC. Preference for marine raw materials is given to material produced according to the IFFO RS or MSC standards and from suppliers giving Fish- Source Score data. Fishmeal and oil extracted from what was previously waste from the direct human supply chain of fish (trimmings and by-products) are increasingly used, prepared to standards set to our suppliers. Focus has also been applied on developing alternative sources of highly digestible protein, meeting the requirements of the fish for healthy, vigorous growth. The raw material basket has been greatly expanded from fish based products to predominantly arable crop products. These bring new supply lines and potentially new challenges for responsible sourcing. Soy protein concentrate is now an important ingredient in salmon feeds for EWOS Norway and to address historical concerns regarding the production of soy in certain countries, EWOS has joined several initiatives for responsible sourcing of this material. EWOS is member of RTRS and ProTerra, working particularly, but not exclusively, in Brazil to assure the supply of responsibly produced soy products. In 2016 EWOS expects to have 100 per cent certification of soy protein concentrate (SPC) purchases from Brazil, supported by open engagement with stakeholders in Brazil. EWOS also committed to the 2015 FEFAC initiative to develop responsible guidelines for sourcing soy products. According to customer requirements, EWOS can supply feed to various eco-certification schemes. For example, EWOS Scotland has an organic product line (Soil Association and Debio). ASSESSING PERFORMANCE EWOS acts on its commitments to responsible sourcing of raw materials by having traceability through its supply chain and ensuring a high level of transparency in raw material sourcing. We monitor and report on the following aspects on a routine basis. Numbers in brackets refer to EWOS and GRI indicators. > More on p. 67 Aspects Marine index [EWOS 8] Traceability of supply chain [EWOS 10] Transparency of raw materials [EWOS 8, EN1, EN2] Procurement practices [FP2] GOVERNANCE Most projects in EWOS Innovation are also related to sustainability. In terms of finding new sources of raw materials, better raw materials, waste management (more use of by products) and looking for alternative sources of omega-3 for example. The CEO of EWOS has been a driving force in innovating fish feed a key player in many of the sustainability initiatives in the salmon feed industry today.

26 24 Section 02 INNOVATING FISH FEED Notes: Figures exclude Vietnam EWOS Marine Index in Salmon feeds Per cent (marine ingredients/ feed sales) Fishmeal (% /feed sales) Fish Oil (% /feed sales) Total (% /feed sales) Compared to 2005, EWOS has decreased its marine raw materials (sum of fish meal and fish oil) by half, from 55 per cent in 2005 compared to 27 per cent in The use of fish meal and fish oil was slightly lower than Note: Figures include EWOS Vietnam EWOS RAW MATERIAL USE 2015 Raw materials used for salmonid feeds and feeds for other species like pangasius and tilapia Inclusion (as % of raw materials) Origin Carbohydrates & binders incl beans & peas 19.0% Australia, Canada, Chile, Germany, UK, USA, Vietnam. Fishmeal 16.6% Chile, China, Denmark, Iceland, Ireland, Norway, Panama, Peru, UK, USA. Soy protein concentrate 15.3% Brazil Vegetable oil 14.5% Argentina, Baltics, Canada, Chile, Germany, Netherlands, Russia, UK Fish oil 9.8% Chile, China, Denmark, Iceland, Ireland, Norway, Panama, Peru, UK, USA. Animal by-products 6.7% Argentina, Belgium, Brazil, Canada, France, Germany, Italy, Spain, USA. Wheat gluten 5.5% Argentina, Belgium, Canada, China, France, Germany, Lithuania, Russia, UK, USA Other vegetable proteins 3.5% Argentina, Dubai, Philippines, Vietnam, USA Sunflower meal 3.1 % Argentina, Lithuania, Russia, Ukraine Maize gluten 2.6% Belgium, France, USA Soy HiPro & soy extracted 1.9% Argentina, China Pea protein concentrates 0.7% Canada, China, Germany Oil seeds 0.7% Canada, UK SUM 100% Microingredients such as vitamins, minerals and pigments are not included in this summary.

27 OVERVIEW OF FISH SPECIES USED TO MAKE FISHMEAL AND FISH OIL FOR EWOS FEED 2015 (INCLUDING EWOS VIETNAM) Category Species Category % % Total marine ingredients Fish trimmings & byproducts Herring trimmings 50, White fish offal Hake trimmings Atlantic mackerel trimmings Capelin Various species Fish trimmings & byproducts Total Forage Fish Anchovy Blue whiting Capelin Menhaden Sardine Sprat Various species Forage Fish Total Other Marine Ingredients Krill 0.08 Other Marine Ingredients Total % Notes: Species that individually make up less than 2 per cent of the mix have been grouped together under various species. Countries making up less than 2 per cent of the total fish meal and fish oil are not listed. Figures include EWOS Vietnam For the marine ingredients an overview is given on sourcing by either fish trimmings and by products or forage fish. Roughly 68 per cent of the marine ingredients were sourced from forage fish, the main species being anchovy but also volumes of Blue whiting, capelin and sardine were also significant. The fish trimmings and byproducts category was 32 per cent of the marine ingredients, with herring trimmings being a major species in this category. EWOS uses a very small amount of krill meal in its feeds. COUNTRIES OF ORIGIN OF CAPTURE FISH Overview of countries of origin for many of the species used in fishmeal and fish oil purchased by EWOS for salmon feed (Canada, Chile, Norway, Scotland). EWOS Vietnam are excluded because the main feed volume is for warm water species that have a low requirement for fish meal and fish oil. Fish species Anchovy Blue whiting Capelin Sprat Menhaden Herring Jack mackerel Norway pout Sand eel Sardine Country Peru, Chile, China Denmark, Iceland, Ireland, Norway, UK Norway, Iceland Denmark, Norway, Ireland USA Norway, Denmark, Iceland Chile Norway, Denmark Norway, Denmark Chile, Panama

28 26 Section 02 INNOVATING FISH FEED Notes: Figures are excluding EWOS Vietnam Share of trimmings and byproducts in fish meal and fish oil in salmon feeds Per cent The use of trimmings and by products for EWOS salmon feeds as a source of marine ingredients has increased from 21 per cent in 2010 to 30 per cent in EWOS UK has the highest use of by-products and trimmings at 48 per cent of the marine ingredient use in Notes: Figures are ex. EWOS Vietnam Reference efcrs were taken from EWOS customers globally (efcr used was 1.3) MARINE NUTRIENT RATIOS 2015 Marine Protein Dependency Ratio (MPDR) 0.83 Marine Oil Dependency Ratio (MODR) 0.74 Marine protein and oil dependency ratios are shown. These ratios were developed by EWOS (Crampton et al. 2010) and demonstrate how much of the nutrient value from marine ingredients is transformed into farmed salmon. The values for 2015 demonstrate that for the first time EWOS group were providers of feed that gave our fish farmers the possibility to be net producers of marine protein. EWOS have for several years been net producers of marine oil. There are be country to country variations. MPDR = ((fishmeal% * 68%) * average efcr) / 17.5% MODR = (fishoil% + (fishmeal% * 8%) * average efcr) / 19.7% FORAGE FISH DEPENDENCY RATIO Forage Fish Dependency Ratio for Fish Meal (FFDRm) 0.6 Forage Fish Dependency Ratio for Fish Oil (FFDRo) As well as the marine dependency ratios that EWOS developed, there are also the forage fish dependency ratios for fish meal (FFDRm) and fish oil (FFDRo) that the ASC adopted as their reference for marine ingredient reliance. The equation for the forage fish dependency ratio is given on next page, and as the name suggests includes only the ingredients coming from forage fish and not the byproducts or trimmings. These are reported for EWOS for full year Both the fish oil and fish meal forage fish ratios for all the EWOS companies meet the criteria for ASC which is <1.35 for FFDRm and < 2.95 for FFDRo. It is also important to note that the forage fish dependency ratios vary between countries due to customer preferences regarding marine ingredient composition of the feed, and also the sourcing capabilities for byproducts and trimmings.

29 (% fishmeal in feed from forage fisheries) * (efcr) FFDRm = 24 (% fishoil in feed from forage fisheries) * (efcr) FFDRo = 5.0 or 7.0, depending on source of fish NUMBER OF SUPPLIER AUDITS PLANNED AND CARRIED OUT EWOS Norway EWOS Chile EWOS Canada EWOS Scotland EWOS Vietnam Total Target Actual % 100% 111% 100% 75% 100% 100% Audits of EWOS raw material suppliers are planned based upon the results of a risk analysis that considers quality and food safety risks as well as sustainability requirements, in addition to commitment to UN Global Compact Principles. This indicator is used to measure actual compared to planned supplier audits. In 2015 a total of 44 supplier audits were planned for EWOS and 100 per cent of these audits were acheived. It is not possible to report the findings of these audits due to supplier confidentiality, however any deviations observed in the audits are followed up and processed according to EIMS. Opportunities for improvements identified are also the basis for supplier development and long-term relationshoips between EWOS and their suppliers. MARINE INGREDIENTS EWOS gives preferential supply to IFFO RS certified fish meal and fish oil products. In addition, we support the development of Marine Stewardship Council (MSC) for reduction fisheries. In 2015, 93 per cent of the fish meal purchased by EWOS was IFFO RS, with EWOS Scotland having 100 per cent IFFO RS purchases for example. SOY Today, EWOS is a member of the current standard bodies for soy (for example RTRS and ProTerra) and also supports the FEFAC guidelines for responsible soy. EWOS Norway is the largest user of soy protein concentrate in EWOS and in per cent of the soy product was purchased as certificates. For EWOS Norway, this value is expected to be 100 per cent within GMO POLICY EU regulations require a food producer to apply to the National authorities if a specific GMO ingredient should be used. If approved GMO ingredients are used in feed, the feed must be labelled accordingly, but the final product (e.g. fish, meat or cheese) is not subject to the same labelling requirements. In Norway and UK, EWOS customers do not want GMO raw materials used in EWOS feeds. To meet the requirements of our customers, EWOS has not been using any GMO ingredients in the feed in UK and Norway to date. This has also been the situation in Outside the EU, the use of GMO ingredients is common and there are no specific labelling requirements. Both EWOS Canada and EWOS Chile have no requirement for non-gmo ingredients, and would thus use GMO ingredients in their feeds when applicable.

30 28 Section 02 REDUCING OUR FOOTPRINT

31 REDUCING OUR FOOTPRINT THE CHALLENGE Climate change and resource depletion challenges food production OUR RESPONSE Research and operational improvements to minimise the footprint of our own operations as well as that of fish farming

32 30 Section 02 REDUCING OUR FOOTPRINT WHAT S ON tomorrow s menu? Food comes with a footprint. Are you willing to change what you eat in the name of climate change? INSECTS Rich in proteins, vitamins and amino acids. 95% RAW MATERIALS MATTER Raw materials account for roughly 95 per cent of the carbon footprint of salmon feed. Have you ever seen a swarm of crickets on the move? Crickets by millions almost turning day to dark on their mission to mate and find a place to lay their eggs? Crickets in cascades invading gardens, crawling all over buildings and threatening farmland? If not personally, then you are sure to have seen the phenomenon on TV. Now, think about those endless cricket swarms again, and then think food. As unappetising as the thought may be, the practice of eating insects is being hailed as an important element of a new global diet. Meat consumption is growing globally, driven by economic growth and a consequent switch towards more protein-rich diets in many regions. However, there are environmental challenges associated with meat production, not least related to freshwater consumption and greenhouse gas (GHG) emission from livestock rearing. We need to secure other and more environmentally friendly sources of protein. Such as crickets. But fear not, there are alternatives. Both plants and fish are good and assumingly more palatable options. This includes legumes such as peas, beans and lentils, as well as salmon and other farmed fish species. In fact, substituting meat with proteins from farmed fish is a very efficient way of reducing your carbon and water footprints. FUTURE-FRIENDLY FOOD Here is why, using farmed salmon as an example: Cold-blooded and equipped only with fins, not feet, salmon uses no energy on regulating body temperature and less energy on swimming than livestock do on standing and walking. Furthermore, about two-thirds of the salmon is edible fillet, far more than for any land-

33 SUPERIOR SALMON Salmon is an efficient animal to farm. It has a low feed conversion ratio and yields a high share of fillet, placing it second to only chicken in terms of carbon footprint. Farmed Atlantic Salmon Chicken Pork Beef CARBON FOOTPRINT (kg CO 2 equivalents / kg edible part) FEED CONVERSION RATIO (kg feed consumed / kg biomass gained) ENERGY RETENTION (energy in edible parts/ gross energy fed) 23% 10% 14% - PROTEIN RETENTION (protein in edible parts / gross protein fed) 31% 21% 18% - EDIBLE YIELD (edible parts/ total bodyweight) 68% 46% 52% - Source Welch et al. (2010) From Fishing to the Sustainable Farming of Carnivorous Marine Finfish, Reviews in Fisheries Science, 18:3, Torrissen et al. (2011) Atlantic Salmon (Salmo salar): The Super-Chicken of the Sea?, Reviews in Fisheries Science, 19:3,